Should You Offer A Free Trial?

Have burning questions about how to run your small business better? E-mail askanexpert@forbes.netwith your query, and we'll track down the advice.

I want to expand my customer base. Are free trials worth the investment?

Absolutely. A free trial is a great marketing tool and a solid step toward establishing good will with new customers. Trials with products aimed at particular audiences are effective, such as chewing gum geared toward people with dental work, tasty protein bars for athletes or eye shadows that complement certain eye colors.

''Very few people are going to give you a bunch of money to try something if they are already using a product that works,'' says Kenn Devane, president and CEO of MineTech, a consultancy that helps companies find patterns in customer data. "I think you have to do a free trial."

Big companies have made hay with free trials for years. Time Warner's
AOL unit used them to lure fledgling Internet users in the late '90s;
Burger King
recently hooked up with
MasterCard
to offer free meals to frequent card users; and the
New York Times Co.
now offers 14-day free trials to boost the number of subscribers for the online version of its flagship newspaper.

Having a big marketing budget helps, of course--that's why small companies have to execute with precision. "The hard part is knowing where to draw the line," says Devane. In other words, don't give away the store.

The first step in setting up a free trial is finding the right audience. ''Identify people who are category influencers and will spread the word,'' says Paul Rand, founder of Zócalo Group, a unit of advertising juggernaut
Omnicom Group
. ''The average person tells 16.5 other people about a product they like.'' (For more on market surveys, check out Six Marketing Tactics Worth Paying For).

Next step: Craft an effective--but reasonable--offer. While there is no hard rule for how much you should spend, experts recommend plowing up to 10% of your monthly sales into a free trial. Effective trials set clear time frames for the offer: 30 to 90 days is often appropriate.

Setting a timetable not only helps you manage your marketing budget but also prepares customers for the shock of having to pay for the service in the future. One way to lessen the jolt is by offering a discounted rate for first-time paid use--up to 15% is sufficient. Rand also suggests providing coupons with a trial for people to pass on to friends.

One caveat: Free trials work differently when you are selling a product as opposed to a service. Chalk it up to psychology. Customers are conditioned to expect sales on products like clothes or gadgets; generally speaking, a sale is not indicative of the quality of a particular product.

Not so with services, says Gene Grabowski, senior vice president at Levick Strategic Communications, a Washington, D.C.-based marketing and public relations firm. Give away hours of your painstaking analysis for free, and customers may think the conclusions are not worth the paper they are printed on.

Finally, don't just see free trials as an opportunity to win new customers--see them as a way to improve your product. Even if trial participants don't turn into paying customers, their feedback on your product is more than worth your efforts.